MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by Cinq Music Group, a technology-driven record label, distribution, and rights management company.
Regular MBW readers will be well aware of the rising power of the independent and DIY artist market.
Recent stunning stats on that score include the fact that TuneCore is now paying out over $400m a year to self-releasing acts, having distributed the music of over a million independent artists to date.
Meanwhile, TuneCore rival CD Baby recently confirmed that, in Q2 this year, it counted some 950,000 active distribution clients on its DIY platform.
According to Midia Research, the self-releasing artist sector generated $873 million in 2019 – enough to claim a 4.1% market share of the global recorded music industry.
With all of this in mind, China is becoming a particularly interesting hotspot for the DIY artist market – with the territory’s two biggest streaming platform operators, Tencent Music Entertainment (TME) and NetEase Cloud Music, duking it out for supremacy.
Back in July, Tencent Music revealed that it had paid 590 million yuan (over $84m) to date to indie artists using its ‘Tencent Musician’ program.
Launched three years ago, Tencent Musician enables independent artists to upload their music to TME platforms, as well as offering them services such as music publishing, marketing, copyright management and professional training.
Last Tuesday (November 10), Tencent Music’s CEO, Cussion Pang, revealed just how beneficial these indie artists are becoming to Tencent’s platforms.
“We saw the number of indie musicians exclusive to [TME platforms in Q3] increase by more than 20 times compared with a year ago – boosted by a series of financial incentives and technology-based support services.”
Cussion Pang, Tencent Music (speaking November 10)
Speaking in the wake of Tencent Music’s Q3 results, Pang told analysts that TME was directing “more resources to support indie musicians and promote original music”.
He added: “We continue to see triple-digit year-over-year growth in both the number of participating indie musicians on the platform, and the number of original songs uploaded to it.”
Importantly, Pang further revealed: “We saw the number of indie musicians exclusive to [TME platforms in Q3] increase by more than 20 times compared with a year ago – boosted by a series of financial incentives and technology-based support services.”
The fact Tencent Music is offering indie artists “financial incentives” is obviously interesting. Even more interesting, however, is the word “exclusive”.
Thanks to local anti-competitive crackdowns, Tencent Music is no longer able to exclusively license (and then sub-license) content in China from the likes of Universal Music Group.
It appears TME is still enamored with the idea of exclusivity – but has switched its focus in this area away from record labels, and towards the independent artist market.
MBW’s Stat Of The Week: Tencent Music has seen “triple-digit year-over-year growth” in the number of indie artists on its platforms; its rival, NetEase Cloud Music, saw total Chinese indie artists on its service double to 200,000 in the 12 months to October 2020.
Tencent Music’s biggest rival in China, NetEase Cloud Music, is also seeing an explosion in activity surrounding independent artists – with its own rival programs in place to support their work.
NetEase‘s Project Cloud Ladder, for example, is dubbed by the company as “an initiative to encourage independent musicians to create better music”.
What does that entail?
Well, we know that the services laid on by NetEase Cloud Music for independent artists can go way beyond your typical DIY distribution offering.
“NetEase [is] strengthening our support of, and investment in, independent musicians [via] dedicated teams of professional songwriters, composers, producers as well as other resources such as AI technology and marketing solutions.”
William Ding, NetEase (speaking November 19)
NetEase (NetEase Cloud Music’s parent) released its Q3 results on Wednesday (November 19). The firm’s CEO, William Ding, subsequently spoke specifically about the importance of wooing independent artists during a call with analysts.
Said Ding (translated): “NetEase continues to emphasize our original music library by strengthening our support of, and investment in, independent musicians [via] dedicated teams of professional songwriters, composers, producers as well as other resources such as AI technology and marketing solutions.”
The idea that NetEase can help indie artists “create better music” isn’t just marketing spiel, then: the platform is literally hooking up the cream of China’s indie artist community with hit-making songwriters and producers, in order to yield professional-level material.
If NetEase Cloud Music was a record label or music publisher, that might be called A&R.
According to recent stats published by NetEase, in October 2020, NetEase Cloud Music was home to music from over 200,000 Chinese independent musicians – representing 100% year-on-year growth in volume terms.
A report from NetEase on its work with independent artists, published November 6, suggests that, as recently as 2016, the platform only hosted music from 20,000 indie acts.
“Online music platforms have greatly impacted the release pattern of music in China and empowered more musicians to have the chance to shine and thrive in the industry,” NetEase said in a statement accompanying the report.
As well as revealing NetEase Cloud Music’s internal stats, this report surveyed 11,857 independent artists to ascertain how they were faring on the platform in 2020.
It concluded that, since 2017, over 40% of independent musicians in China had seen “obvious revenue growth”.
NetEase added that the total revenue of independent artists participating in its Project Cloud Ladder exceeded RMB 100 million (circa $15m) in the first 10 months of 2020.
It appears, then, that a heated tussle is breaking out between Tencent Music and NetEase Cloud Music to become the preferred home of indie artists in China – with significant business benefits awaiting the victor.
William Ding was asked about NetEase Cloud Music’s rivalry with Tencent Music on NetEase’s Q3 earnings call, and used the question to reiterate the importance of indie musicians to his company’s prospects.
“We are very confident and ambitious that in the future, NetEase Cloud Music will have a leading market share,” said Ding (translated).
“The way for us to [achieve that leading market share] is to [place] emphasis on original and organic music… [while], at the same time, providing resources to support and nurture China’s independent musicians in supplying more and more high quality music content, building a healthy cycle organically.”
“NetEase’s efforts to help independent musicians to be heard and appreciated give us a competitive edge.”
NetEase company statement
In a company statement given to MBW earlier this month in conjunction with its indie artist report, NetEase Cloud Music talked of its “mission to help tens of thousands of talented Chinese independent musicians create indigenous content that resonates with local listeners”.
It added: “NetEase’s efforts to help independent musicians to be heard and appreciated give us a competitive edge.
“In this way, fostering the growth of independent music both opens up a bigger market for the musicians, and introduces original and diversified content to our users, which contributes to sustainable growth.”
According to Tencent Music’s latest quarterly results, the company ended Q3 2020 with 646m Monthly Active Mobile Users of its online music services.
As it has for some time, NetEase said in its Q3 results that NetEase Cloud Music has over 800m registered users (though registered does not necessarily mean active).
Cinq Music Group’s repertoire has won Grammy awards, dozens of Gold and Platinum RIAA certifications, and numerous No.1 chart positions on a variety of Billboard charts. Its repertoire includes heavyweights such as Bad Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel, and hundreds more.Music Business Worldwide